The income you earn from a country other than your home country is considered taxable. Cross-Border Taxes can mean you work in one country, but are a resident in another, have dual residency, or run an international business. 

For example, you are a U.S.- Canadian dual resident and earn your income from Canada. The laws in such cases will impact how you file taxes in both countries. 

This is generally also referred as cross-border taxation or international tax. 

It involves a lot of complex procedures and requires years of training to interpret treaties and laws for these taxation. And, each person’s circumstance is different.

Our Cross-Border Tax Experts are here to help if you’re struggling to figure out your cross-border taxes.

Cross-Border Tax planning assesses your income, transactions, revenues, and whatever comes under your financial life and develops a plan to ensure you don’t overpay your taxes.

Canadian Departure Tax depends on your circumstances. To better understand, here are some of the steps: 

1 – Understand your residency determination and how that will impact your taxes. 

2 – Understand Canadian Departure Tax exemptions. 

There are some Canadian Departure Tax Exemptions, for example 

– If your Canadian real property was a principal residence (unless you plan to rent it out)

– Your Canadian business property operates as a permanent establishment. 

– You are a short term resident (60 months or less).

3. Understand your departure tax on assets.

– Personal use and listed personal property (art, stamps, jewelry, coin stamps, rare manuscripts).

– Property owned outside of Canada.

– Unincorporated businesses located outside of Canada.

– Portfolio investments (mutual funds, company shares, interests in partnerships, non-resident inter-vivo trusts, etc.)

Here are some of the rules:

If you use these for personal use, no yearly CRA tax filing obligations on Canadian real estate investments and rental property.

Non-residents holding Canadian rental property must remit 25% withholding tax from the rent and file with CRA on a yearly basis.

When it comes to selling, you got to deal with some notifications.

For Canadian Mutual Funds in Non-Registered accounts, non-residents are prohibited from buying mutual funds, real estate investment trusts, and EFTs, but you can hold onto existing ones.

If you are holding a mutual fund, you fall under the Passive Foreign Investment Corporation tax reporting in the U.S., which comes with a lot of punitive tax filings and higher tax rates.

For a TFSA, a Tax-Free Savings Account, it depends on your Canadian tax residency.

Once you leave Canada you can no longer contribute to the TFSA, but the account itself remains intact. This tax-free status is not applicable for the U.S. income tax, and all income earned even if not contributed will be taxable by the IRS.

For a Registered Retirement Savings Plan, the US equivalent is an IRA, but transferring to an IRA is highly discouraged. You have three options: withdrawal, converting to RRIF for distribution, or leaving it alone.

Sound complicated? It is! Be sure you talk to a Cross-Border Tax CPA before approaching any decision. It involves the risk of your money.

Canada does not have an estate inheritance death tax. The estate is considered a sale by the CRA which means that it’s the estate that owes taxes to the government and not the beneficiaries of the estate. In simpler words, the beneficiary of the estate will have inherited assets at fair market value.

The final tax return includes deemed disposition of all the assets with some exceptions the deceased owned including income till the date of the death.

Yes, you have to file all Canadian taxes that comes under their rules and regulation.

As a citizen of the USA, while working and living in Canada, you may need to file some taxes applicable in Canada.

This is a case-by-case basis and each scenario will be different.

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The IRS can charge you for not paying taxes. You can face penalties, interest costs, and in some cases criminal charges.

Since there are a lot of details here, the answer depends upon the case-by-case financial data you have.

However, here are some things to note if you’re moving from US to Canada:

1 – Report and gather of your data regarding capital gains and dividends.

2 – Make sure all of your financial data goes through a legal process and you’re transparent.

3 – Immediately get help from a professional CPA who deals in cross-border taxation. Our team is happy to help.

Yes! US citizens have to file taxes in both the US and Canada. Even if you have paid taxes in Canada, you still have file taxes in U.S. on worldwide income.

Non-residents are supposed to pay tax on the income they earned from Canada. Further, it depends on the type of income they have earned as well.

Consulting with a professional CPA can be very helpful in such cases, as each scenario is different.

Yes! FBAR applies to corporations, LLCs, partnerships, trusts and estates.

There are several accounts to which FBAR applies.

here are a few examples:

• Checking accounts
• Savings accounts
• Securities
• Brokerage
• Deposit
• Any other account held with a financial institution.

Moreover, if you hold a position of signature authority, you may also need to file for FBAR.

Yes and No! Yes if their worldwide income is over the filing limit. No, if the previously mentioned case is opposite.

Claiming tax treaty benefits requires assessing your financial data. This is a case-by-case answer.

Consult a professional CPA to claim the benefits.

You cannot directly claim tax forgiveness. However, using effective policymaking and strategizing your taxes with a reputable CPA, you can build a case to get an exemption.

To be precise, it’s a case-by-case answer.

Consult a Cross-Border CPA in such cases.

This is a case-by-case answer.

IRS looks into paychecks, durations, dependents, and some other factors as well to decide your case.

However, to use a general example, if you earn $1000 for every two weeks with no other liabilities, IRS can $538 from your paycheck period.

Every country differs in applying frameworks for cross-border taxation.

In the context of U.S., The IRS provides different frameworks for international transactions and cross-border income. This further has variations for the country where somebody does business or earns income.

Cross-Border Tax depends on the country and relevant tax treaties.

In short, it requires reading a lot of treaties and rules to decide taxations for any circumstance. We don’t recommend trying to understand this complicated process yourself. You’ll get better, more relevant information from a consultation with a Cross-Border Tax CPA.

Yes, you have to pay taxes in both the U.S. and Canada. Moreover, in some instances, you have to pay extra taxes than a normal citizen does, but you can also benefit from tax treaties.

These can be very tricky since this affects your real-life income and professional future. Speak to our Cross-Border Tax CPA Experts to get the help you need for your individual case.

Yes, you are required to pay the taxes. You must file all of your expat taxes, it doesn’t count if you have paid in Canada or not.

Double taxation is referred to twice the taxes you pay on the same asset or income. For example, residents living in two countries can be taxed twice on their income using the taxation rules of each country.

Yes, you normally do. A Canadian resident who is a U.S. citizen would pay tax to the U.S. IRS and then would pay to Canadian revenue agency as well.

This is a case-by-case answer.

However, on a general level, an expat should file U.S. taxes and then claim foreign tax credits to help themselves up.

Moreover, to produce an effective strategic decision, consult a reputable CPA first. Our team is happy to help!

You can avoid double taxation by using foreign tax credit. This makes sure that you have previously paid taxes in U.S., and now you don’t have to pay extra. Moreover, your credit cannot exceed the tax amount you paid in other country.

Most often, you will need to pay some taxes in both countries, but it depends on your assets. Regardless, there are a few key things to look out for.

There are 3 Main Tax Issues Impacting Dual US-Canadian Citizens:

– The financial reporting obligations beyond filing taxes for dual US-Canadian Citizens

– The obligations on US border cross-citizen tax-free accounts

– IRS Amnesty Programs for non-compliant US Nationals

Both the 401k and the Canadian RRSP provide monetary savings for retirement.

Some Similarities Are:

Both can be invested and can increase a retirement account.
They are tax-deferred
They have annual contribution limits
They provide access to a combination of investments

Some Differences:

– An RRSP account doesn’t penalize an account holder for early withdrawals for Canadian tax purposes, but in the US you could be taxed 10% for an early withdrawal on top of regular income tax.

– Unused RRSP contribution limits can carry over to next year, but a 401k does not allow rollover contributions.

I just want to make sure I’m understanding this… an IRA is pretty much the same as an RRSP, correct?

Yes. A Canadian Registered Retirement Savings Plan (RRSP) is equivalent to a Traditional Individual Retirement Account (IRA). They offer the same financial path and tax advantages in savings for retirement.

A TFSA is not considered tax-free by the IRS in the U.S., and income earned in a TFSA is reportable and
taxable on a current year basis in the U.S. on form 1040.

In Canada, Canadian are encouraged to open TFSA accounts and save for retirement without worrying about tax. All of the interest, gains, dividends, and investments made throughout as well as withdrawals from these savings sources are tax-free.

But, in the US, the TFSA account does not enjoy the same tax status as it does in Canada.

Form 1040 NR:
– 5 pages long
– Can accommodate all types of income.

Form 1040NR EZ:
– 2 pages long
– Limited in claiming dependents
– Nonresidents cannot file

Form 1040 accounts U.S. resident return. If you file this form, then you need to report worldwide income and you are accountable to taxations as well.

Before filling out form 8233, you must understand the purpose of form 8233.

This form is used for claiming exemption from withholding on different personal services. This form is specifically used by Non-resident Alien Individuals.

If you’re a non-resident alien individual and want to claim exemption on compensation, use 8233 form.

Here some routine forms you need to file:

– Form 1040, U.S. Individual Income Tax Return
– Form 2555, Foreign Earned Income Exclusion.
– Form 1116, Foreign Tax Credit.
– Form 8938, Specified Foreign Financial Assets.
– Form 8621, Passive Foreign Investment Corporations
– Form 8833, Treaty Based Position Disclosure
– FinCen Report 114, Report of Foreign Bank and Financial Accounts

FATCA addresses those U.S. taxpayers who have foreign assets with a value crossing above $50,000 (This is different for those residing in the US and those living abroad). It needs those taxpayers to report these financial belongings on Form 8938.

If you fall under this category, it’s advisable to report your assets on Form 8938. For more details, consult a CPA to know more about and to save your money.

Yes, it addresses those U.S. citizens who have foreign assets with a specific threshold.

401(k) addresses money earned in USA. Since the accout got set-up in U.S., it has the first right to tax this income. Yes, you can bbe taxed in Canada as well, but it has a secondary right to tax this income.

However, the tax you paid in USA can also be considered a foreign tax credit.

Here some quick checks to find trustworthy CPA:

1 – Check out their PTIN
2 – Check out their CPA Lisence
3 – Check out their reviews, it speaks their credibility
4 – Check out if they are trustworthy to know your financial details.